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Report: China forcing gov’t agencies and companies to stop using foreign-built computers

Chinese police. (Beijing Patrol/Flickr)
May 06, 2022

The Chinese government has reportedly ordered its central government agencies and state-backed corporations to stop using foreign-branded personal computers and to instead adopt domestic options within two years.

Sources familiar with the Chinese government’s plans told Bloomberg on Friday that the order would require an estimated 50 million replacement PCs for just Chinese central government officials.

The sources who spoke to Bloomberg said the computer replacement effort will eventually expand to provincial government offices and will also follow the two-year timeframe.

Bloomberg’s sources said some Chinese officials were already asked after their week-long May break to turn in foreign PCs and obtain alternatives made in China and running on domestically developed software.

China has been engaged in a campaign for about the last decade to replace foreign technology with domestically developed alternatives. The effort is reportedly aimed at reducing China’s reliance on technology produced by geopolitical rivals like the United States, especially for things like computer semiconductors, servers and phones. This two-year effort would represent the most aggressive development in this broader technology replacement campaign.

Bloomberg reported U.S. sanctions on Chinese technology firms like Huawei helped demonstrate Chinese reliance on U.S. technology. Local Chinese firms also felt the effects of such U.S. actions.

The Chinese government reportedly accelerated its technology replacement campaign in 2021 when it gave a secret government-backed organization the authority to review and approve local suppliers working for sensitive Chinese technology efforts like cloud services and semiconductors.

In response to China’s past efforts to force a change and ban U.S.-developed products from official procurement lists, U.S. companies like Hewlett Packard (HP) and Microsoft have set up joint ventures with Chinese state-backed firms to secure more orders for their products.

The reported mass replacement effort is expected to harm sales of U.S. technology companies like HP and Dell. Bloomberg reported both U.S. companies’ stocks fell by about 2.5 percent within hours of the news on Friday. By contrast, China’s most popular domestic computer maker Lenovo, saw stock prices rise by around five percent in Hong Kong.

The Chinese software maker Kingsoft Corp. also saw stock prices rise on Friday. China’s technology and computer makers Inspur Electronic Information Industry Co., Dawning Information Industry Co. and China National Software & Service Co. Ltd. also saw boosts in stock prices in mainland Chinese exchanges on Friday.

Inadequacies in Chinese computer products have slowed their domestic adoption in the past, but companies like Lenovo and Inspur have gained a larger share of the global market. Chinese companies have still had to rely on advanced U.S.-developed parts like semiconductors developed by companies including Intel and Advanced Micro Devices.